Posted by I HAVE THE REPORT on May 08, 2005 at 08:39:54:

In Reply to: Re: IS THERE A STATE BOARD OF ED REPORT? posted by I HAVE THE REPORT on May 08, 2005 at 08:39:06:

REPORT OF EXAMINATION - OCTOBER 2004
CREATE BOARD OF TRUSTEES - PUBLIC SCHOOL CONTRACTS LAW AND
OPEN PUBLIC MEETINGS ACT VIOLATIONS

The Department of Education, Office of Compliance Investigation, (OCI) conducted a review of the CREATE Charter School Board of Trustees' compliance with the Public School Contracts Law and Open Public Meetings Act.' At the time of the review, the following deficiencies were noted:

1. The financial statements appear to improperly report a positive fund balance and have not been prepared in accordance with Generally Accepted Accounting Principals (GAAP).

A review of the financial records, budgetary data, and operations of CREATE Charter High School as well as discussions with school administration disclosed that the 2003 fiscal year beginning General Fund Balance of $118,627.00 appears to be overstated. Since the school opened, the payroll and accounting records have not been properly adjusted for the accrued salary expense related to the teaching staff that have opted to be paid over 12 months.

The OCI investigators were notified of the potential understated salary expense, which was confirmed by the school's lead person, Mr. Stephen Lipski and consultant, Mr. Bob Doria. The investigation disclosed that the accounting records report the salary expense based on actual payments issued to the employees and not the actual salaries that have been earned, some of which are paid beyond the fiscal year of June 30. 'Mis practice violates the (Generally Accepted Accounting Principals) GAAP Technical Systems Manual Chapter 3 - Principles of Governmental Accounting which states that the modified accrual basis of accounting should be used for government funds. In other words, the amount owed should have been calculated and booked as the amount to be paid. Since the accounting records have not properly recorded all salary expense in accordance with GAAP, the OCI is unable to determine the impact to the fund balance that has been presented in 2001 and 2002.

The school's administration concurred that the violation occurred and were advised by independent auditors who conducted the annual audits of the school's finances in 2001 and 2002 to rectify the problem by inserting footnotes addressing the fact that modified accrual accounting practices were not utilized to calculate current budget amounts. The Board of Trustees failed to provide evidence to substantiate that this practice of improperly reporting a positive fund balance had indeed been rectified. In fact, the OCI was advised that the current 2003 audit has recently begun, by a new audit firm, and that the school's administration will prepare an analysis of the salary adjustment to be considered by the new audit firm.
Report of Examination - October 2004
CREATE Charter High School - Public School Contracts Law and Open Public Meetings Act Violations

Follow Ups:

• Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:40:36 05/08/05 (10)
  • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:41:18 05/08/05 (9)
    • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:42:29 05/08/05 (8)
      • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:43:07 05/08/05 (7)
        • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:43:43 05/08/05 (6)
          • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:44:22 05/08/05 (5)
            • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:44:57 05/08/05 (4)
              • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:45:38 05/08/05 (3)
                • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:47:07 05/08/05 (2)
                  • Re: IS THERE A STATE BOARD OF ED REPORT? I HAVE THE REPORT 08:51:09 05/08/05 (1)
                    • Re: IS THERE A STATE BOARD OF ED REPORT? king's a bum 13:40:34 05/08/05 (0)

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: REPORT OF EXAMINATION - OCTOBER 2004
: CREATE BOARD OF TRUSTEES - PUBLIC SCHOOL CONTRACTS LAW AND
: OPEN PUBLIC MEETINGS ACT VIOLATIONS

: 
: The Department of Education, Office of Compliance Investigation, (OCI) conducted a review of the CREATE Charter School Board of Trustees' compliance with the Public School Contracts Law and Open Public Meetings Act.' At the time of the review, the following deficiencies were noted:

: 1. The financial statements appear to improperly report a positive fund balance and have not been prepared in accordance with Generally Accepted Accounting Principals (GAAP).

: A review of the financial records, budgetary data, and operations of CREATE Charter High School as well as discussions with school administration disclosed that the 2003 fiscal year beginning General Fund Balance of $118,627.00 appears to be overstated. Since the school opened, the payroll and accounting records have not been properly adjusted for the accrued salary expense related to the teaching staff that have opted to be paid over 12 months.

: The OCI investigators were notified of the potential understated salary expense, which was confirmed by the school's lead person, Mr. Stephen Lipski and consultant, Mr. Bob Doria. The investigation disclosed that the accounting records report the salary expense based on actual payments issued to the employees and not the actual salaries that have been earned, some of which are paid beyond the fiscal year of June 30. 'Mis practice violates the (Generally Accepted Accounting Principals) GAAP Technical Systems Manual Chapter 3 - Principles of Governmental Accounting which states that the modified accrual basis of accounting should be used for government funds. In other words, the amount owed should have been calculated and booked as the amount to be paid. Since the accounting records have not properly recorded all salary expense in accordance with GAAP, the OCI is unable to determine the impact to the fund balance that has been presented in 2001 and 2002.

: The school's administration concurred that the violation occurred and were advised by independent auditors who conducted the annual audits of the school's finances in 2001 and 2002 to rectify the problem by inserting footnotes addressing the fact that modified accrual accounting practices were not utilized to calculate current budget amounts. The Board of Trustees failed to provide evidence to substantiate that this practice of improperly reporting a positive fund balance had indeed been rectified. In fact, the OCI was advised that the current 2003 audit has recently begun, by a new audit firm, and that the school's administration will prepare an analysis of the salary adjustment to be considered by the new audit firm.
: Report of Examination - October 2004
: CREATE Charter High School - Public School Contracts Law and Open Public Meetings Act Violations


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